TUI had to cancel 175,000 holidays and repatriate 180,000 customers due to an Icelandic volcanic-ash cloud which grounded planes across Europe in April. The cost of the episode is expected to roll in at about £90m and will be passed through the group's third-quarter accounts.
The tour operator hopes that subsequent technical assessments means the impact of any further ash, such as the ash-cloud blowing over Europe at the time of writing, will not be of the same magnitude. The good news is that the original cloud struck when TUI had very few winter holidays left to sell, which helped mitigate the impact. And while summer holiday bookings did slow down in April, they picked up strongly in May. So the group has seen improvements in almost all its markets, especially the UK, and summer booking volumes compared with holidays on offer are currently ahead of last year.
A £25m increase in TUI's operating loss in this seasonally loss-making first half was expected and the strong underlying demand is encouraging. The group has also recently raised £550m from a convertible bond issue, which puts it in a good position to continue growing through acquisition.
Broker KBC Peel Hunt forecasts full-year underlying pre-tax profits of £383m and EPS of 24.6p (2009: £366m/23.5p).
| TUI Travel (TT.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 250p | MARKET VALUE: | £2.8bn | |
| TOUCH: | 249-250p | 12-MONTH HIGH: | 314p | LOW: 216p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | NA | |
| NET ASSET VALUE*: | 180p | NET DEBT: | 67% | |
| Half-year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 5.38 | -456 | -29.6 | 3.00 |
| 2010 | 4.93 | -419 | -27.7 | 3.20 |
| % change | -8 | - | - | +7 |
Ex-div:01 Sep Payment:01 Oct * Includes intangible items of £4.8bn or 426p per share | ||||
